The 79 IBRD-eligible countries, most of them middle-income countries, are home to more than 70 percent of the world’s population living on less than $2 a day. Improving assistance to these countries is thus critical to reducing poverty. For this reason, at its September 2006 Annual Meetings, the World Bank—with the encouragement of its shareholder governments—made a commitment to strengthening IBRD’s effectiveness in partnering with middle-income countries to achieve better development outcomes and to collectively address regional and global concerns. Middle-income countries have substantially improved the quality of their economic management in recent years. Access to market-based financing and risk-management tools has increased, and sovereign financing costs have declined to near all-time lows. But challenges remain. Capital market access remains concentrated in a few countries, and the cost of borrowing is typically much higher than that offered by multilateral development banks. Income inequality and large pockets of poverty persist, exacerbated by unevenness in |  |  © The World Bank | access to education, physical infrastructure, and other public services. Many middle-income countries also face other persistent problems that cannot be solved in the short term. Solving these problems will require strengthening public institutions and improving the business environment and competitiveness of these countries. |
Middle-income countries are repositories of extensive knowledge about and experience with development issues, and they increasingly view themselves as partners, rather than as clients, of the Bank. Many promote development in other countries through foreign direct investment, bank lending, remittances, and even development assistance. Some contribute
to IDA and may also partner in arrears clearance and debt-reduction exercises that benefit the world’s poorest countries. Some middle-income countries are also playing an increasingly important role in the governance of the global economy, helping develop the global agenda on issues such as trade and climate change. Some are delivering global public goods: combating infectious diseases, reducing greenhouse gas emissions, and preserving biodiversity. Middle-income countries want the Bank to be more flexible and responsive; to offer a broader array of financing, risk-management, and credit-enhancement products; and to reduce turnaround times and transaction costs. Although lending and knowledge products have traditionally been offered together, these countries want more sharply focused and higher-quality knowledge services that are not tied to financing. They also want to make more extensive use of the Bank’s convening capacity and experience in framing strategy and assembling portfolios of expertise and finance from multiple sources to help address collective issues. To meet client countries’ needs, the Development Committee strongly endorsed a new strategy crafted by the Bank that will improve performance in each of the Bank’s three business lines: knowledge services, financial services, and strategy and coordination services. In knowledge services, the Bank is seeking to leverage its research and expert services at the sectoral, country, and global levels through project cycle work, analytic work, training, institutional capacity building, technical assistance, and other advisory activities. It is also seeking to engage closely with national think tanks and other international organizations on knowledge exchange. In financial services, the Bank is considering a full menu of financing and credit-enhancement and risk-management tools that can be offered to sovereign and nonsovereign entities. In strategy and coordination services, the Bank will continue to offer its convening capacity and global reach to support country strategy work, including policy dialogue and delivery of expertise to promote growth and reduce poverty, and to address the provision of priority global and regional public goods. (See www.worldbank.org/middleincomecountries.) |
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